The Red Light, and what it means

Today the RumWave predictive model produced a "sell" signal.  Appropriately, I have turned on the Red Light.  It is important to discuss what this does, and does not mean.

What it means:  The stock market is at a point that is likely the high point for the next 10-20 trading days.

What it doesn't mean:  Bet the farm on short positions.

My interpretation of this iteration of the red light is that we are likely to see a 3ish percent pull back before resuming the upward move.  My favorite Elliot Wave blogger suggests that Wave 3 just completed with Wave 4 constituting a pull back.  Wave 5 should take the market to new highs.  I agree with his assessment. I don't think the decline will be a long lasting one.. maybe a week or so.

Today's scores:

I'll begin keeping track of the "UltraWave" score on the scoreboard using a ticker symbol called SDOW.  It is a 3x inverse ETF of the DJIA.